TD Ameritrade Review: More Than Instruments Broker For You

TD Ameritrade is a full-service brokerage that offers zero-commission transactions, premium instructional content, powerful trading platforms, and a flexible and responsive mobile app to meet the needs of everyone from novice investors to experienced day traders investing in a wide range of assets. Because of its user-friendliness and wealth of educational resources, TD Ameritrade is a great choice for novice investors.

Even though Charles Schwab has acquired TD Ameritrade, the business is still operating independently, therefore we will evaluate it based on its performance as a standalone brokerage serving a wide range of investor needs.

TD Ameritrade

Minimum Balance: $0
Cost:
$0 per stock trade
$0.65 per contract per options trade
Promotion: Up to $2,500 in cash
Commission-free ETFs: All
No-transaction-fee mutual funds: 3,700+ NTF mutual funds
Tradable Instruments: Stocks, ETFs, bonds, mutual funds, options, futures, forex
Customer service: Phone 24/7, email, More than 175 branches, Facebook/Twitter messaging
Account fees: $75 transfer fee
Application: TD Ameritrade Mobile and Thinkorswim Mobile apps on the Apple App Store and Google Play Store.

Overview

As one of the largest online brokers in the United States, TD Ameritrade provides investors with varying experiences with various tools. Web-based and mainstream mobile app systems are simple and cater to passive and active investors. Nonetheless, the powerful Thinkorswim interface is perhaps the best bet for novice and day traders because of its broad screening features, charting tools, and analytical analytics. In addition, TD Ameritrade’s extensive selection of trading platforms and other offerings will satisfy all types of investors, from those who like to sit on the sidelines to those who trade multiple times each day.

Usability

Because of the company’s dedication to all customers makes TD Ameritrade’s platforms intuitive and trouble-free. TD Ameritrade uses cutting-edge technology to revolutionize customers’ experience by placing them at the center of all design decisions. In addition, each user can personalize their experience with TD Ameritrade’s web, Thinkorswim, and mobile apps to suit their preferences.

The dock tool in TD Ameritrade web is an adaptable interface that can be customized to your preferences. The dock tool displays and stays on the right side of the screen while the user scrolls the site from left to right, provided the screen size permits this. In general, users have a selection of 13 different modules from which to choose. Account information, bookmarks, and live content such as news, events, videos, Twitter trends, Yahoo Finance headlines, and RSS feeds are just a few examples of the modules available. When a user adds a module to the dock, they have the option of resizing and rearranging it. Additionally, they can select which modules to filter based on their individual preferences for what information to receive.

TD Ameritrade’s four platforms have straightforward sign-in processes (web, mobile app, Thinkorswim, or Thinkorswim mobile). In addition, beginner investors will appreciate the intuitive design of web-based and regular mobile app platforms.

When the user logs into the app, their open positions and account balances are displayed on a single screen. Further down the dashboard, consumers will find their position updates and broader market news.

Internet and mobile platforms are user-friendly and provide easy access to market data, including earnings, dividends, analyst ratings, and forthcoming initial public offerings (IPOs). In addition, traders can quickly access fundamental, technical, and market data by entering a ticker symbol.

Trade Experience

To place an order, traders need only input the ticker symbol for the security they’re interested in trading on the website’s trading platform. Except for fixed-income products, all asset classes and order types (including stop-limit orders) are available on both the mobile app and the web platform. In addition, all of them let you queue up orders to be entered later, and you may use conditional orders on Thinkorswim and TD Ameritrade web, triggered by market price changes.

Choosing a reputable stock or mutual fund to invest in isn’t always a piece of cake. The number of businesses can make the decision-making process intimidating, especially for first-time investors. Stock screeners can be found in TD Ameritrade’s research and ideas area of their online trading platform. Create your screens based on sector, industry, market cap, and more with just a few clicks. However, it may be difficult for first-time visitors to understand how to use this site.

Inside TD Ameritrade’s leading platform is a more advanced trading environment called Thinkorswim, which is aimed squarely at professional investors. Although Thinkorswim’s web platform does allow for simple technical analysis—drawing trendlines, including indicators—it is capable of much more. In addition to providing a full range of analysis tools across asset classes, including options and derivatives, the Thinkorswim downloadable platform may be tailored to the individual tastes of each trader. Plus, traders may use the thinkScript programming language to make their tools and take advantage of the included trading simulator. Comparing TD Ameritrade’s mobile app and website to Thinkorswim, the latter is superior in terms of trading, charting, and analysis tools. However, since Thinkorswim is essentially a trading engine offered by a broker, serious traders will often employ the Thinkorswim desktop platform to analyze and enter trades.

Mobile Experience

If you use TD Ameritrade as your online broker, you’ll notice that trading in the desktop version of the software is as simple as trading on the web. A sizable green “trade” button appears on the top right of the user’s screen; trading is as simple as entering a symbol. In addition, TD Ameritrade’s mobile app provides users with real-time data streaming and customizable watchlists. While the mobile app does not now allow users to annotate charts, it does allow users to trade directly from chart views.

In light of this, the Thinkorswim mobile app’s charts represent a significant upgrade above the default TD Ameritrade app. The Thinkorswim mobile app has many useful features, including the ability to trade multi-leg options, personalize charts, and analyze positions. In addition, traders may easily switch between the downloaded version of Thinkorswim and the smartphone version because of how similar they are.

Products

TD Ameritrade’s web and mobile platforms allow users to trade a wide range of assets. Examples of such investments are exchange-traded funds (ETFs), stocks, options, futures, and cryptocurrencies. Among the features missing from TD is the ability to buy fixed-income securities or fractional shares using the mobile app. In addition, TD Ameritrade provides its customers with access to:

1. Stocks (long and short)
2. Mutual Funds (with more than 13,000 on offer, 3,689 of which are no-transaction-fee funds)
3. Bonds (corporate, municipal, Treasury, and CDs)
4. Futures/ Commodities
5. Options contracts with one or more underlying assets
6. Futures contracts on bitcoin
7. Exchange Rates (70 currency pairs)
8. OTCBB (penny stocks)

Order Types

The order types available to TD Ameritrade customers span multiple channels. For example, stop-limit orders and trailing stops can be placed on all broker’s platforms. However, conditional orders (such as “one cancels the other”) and multiple orders at once are only available on the Thinkorswim platforms and the web platform. In addition, when submitting orders, investors can choose which tax lot they want their investment to be allocated.

Trading Technology

In today’s volatile market environment, investors place a premium on efficiency of action. Sending an order from a customer to a trading platform is known as “order routing.” A customer’s order might go straight to the exchange, or they could go through a broker first. Therefore, the probability of getting the best price when a trade order is placed depends on how a brokerage routes orders. That’s what people mean when they talk about raising prices.

Customers of TD Ameritrade can use the company’s unique order routing technology to send trades directly to their chosen options and stock exchanges. Most trade orders at TD Ameritrade are spray-routed, meaning they are executed in an average of 0.04 seconds. As a result, over 90% of TD Ameritrade’s client orders fall from 1 to 1,999 shares. Thus, the firm claims that its execution quality indicators reflect this. In addition, the broker guarantees a price premium of $0.0209 per share, which they say applies to 97.5 % of client orders.

Backtesting, or analyzing trading strategies using historical data, is a rare feature among brokers, but TD Ameritrade offers one of the few. Thinkorswim backtesting is available to traders in several formats, including Thinkscript, strategies, on-demand, and Thinkback. In addition, traders can program automated methods by having orders execute themselves based on predetermined criteria.

Pricing

To a lesser extent than some of its big competitors, TD Ameritrade has entered the industry race to zero costs. The broker’s practices, however, are generally consistent with those of the sector.

• If you want to buy or sell stocks or exchange-traded funds (ETFs) online, TD Ameritrade will not charge you any commissions.
• Commissions for OTCBB trades are $6.95 per trade, whereas most brokers now offer them at no cost.
• Options transactions are not charged a commission on a per-leg basis. Commissions are $.65 per deal. Exclusively for our VIP option customers, we offer volume-based commission discounts in private negotiations.
• When you buy 50 options contracts at once, you pay $32.50.
• Buying 500 shares and selling five covered call contracts would save you $3.25.
• For mutual funds that are not part of the No Transaction Fee program, the commission is $49.99.
• TD Ameritrade applies a “net yield” markup or discount for purchases and sales of bonds. There is no clear explanation for the cost.
• The exchange expenses incurred by TD Ameritrade for most orders are negligible and are not passed on to the customer.
• As of June 2022, margin interest rates are as follows: 10% for a balance of $10,000; 8.5% for a balance of $100,000 or more. This interest rate is higher than the market average by roughly 1-1.25%. As a result, margin interest rates can be negotiated down for ultra-wealthy account holders.
• The exchange charge for trading futures is $2.25 per contract per side.
  Currencies traded in the foreign exchange market (Forex) are bought and sold in 10,000 unit increments, and traders pay no spread. Instead, TD Ameritrade’s liquidity provider pays the company a percentage of the total volume traded as compensation for its services.
  There are no dormant-user charges.
• There is no fee for transferring a portion of an existing account to another person. However, the price for moving a whole balance is $75.
• The cost of a wire transfer is $25. It costs nothing to ship a paper check but $15 if the recipient needs to be expedited.
• The cost of a corporate action restructuring that is initiated voluntarily is $38.
  For accounts with low balances, a $2 processing fee is applied when a paper statement is requested. Confirmations of trades are provided at no cost.
• Trading with a live broker costs $25 per trade regardless of the underlying asset.

Customer Service

• Telephone support for TD Ameritrade is available at all times.
• Clients can contact the company via phone, email, website, trading platform, Twitter, and Meta for account and trade-related help.
• Thinkorswim mobile, TD Ameritrade’s in-app chat service, allows customers to speak with a live representative without leaving the app.
• Talking to a live agent at TD Ameritrade can cost you money, but it’s worth it. There were a lot of experienced floor traders and market makers among the TD representatives working the trading desk and fielding customer inquiries.
• Clients can get in touch with financial experts at TD Ameritrade. In addition, apple Business Chat, Meta Messenger, Twitter DMs, and, in Asia, WeChat all facilitate chatbox functionality.

Security, Reliability, and Transparency

• For added security across all platforms, the client can use a biometric fingerprint scanner, facial recognition, or both.
• Through extra coverage supplied by London insurers, TD Ameritrade protects each client’s securities and cash holdings to $149.5 million and $2 million, respectively.
• If a customer experiences a loss of funds or securities from their TD Ameritrade account due to fraudulent behavior, the company will compensate them for the amount lost.
• There have been no significant data breaches at TD Ameritrade in the last four years.
• Some clients’ ability to log in to their TD Ameritrade accounts in 2020 was disrupted by login troubles that occurred across numerous TD Ameritrade platforms due to extraordinary quantities of activity.
• Investors had trouble logging in, viewing their portfolios, and making transactions on TD Ameritrade and other brokerages on January 27, 2021. There was probably a market disruption when Gamestop stock ($GME) suddenly rose, which coincided with the outage.

An entire website is dedicated to TD Ameritrade’s pricing so that customers can easily understand the company’s policies and costs. Margin trading, commissions charged by brokers, and other related expenses are detailed here. In addition, discount balance size and the margin interest rate determine the overall margin interest rate. TD Ameritrade’s base interest rates are based on various factors, including competing financial institutions, industry credit conditions, market liquidity, and prevailing market circumstances. The present benchmark rate is 8.50%.

According to the SEC, between 2013 and September 2015, TD Ameritrade severed relationships with 111 independent investment advisers due to concerns about the firms’ potential to cause harm to TD Ameritrade’s company, credit, operations, reputation, or compliance. The broker TD Ameritrade filed several suspicious activity reports concerning suspicious transactions by certain terminated advisers but neglected to file information concerning suspicious transactions by several other terminated advisers.

According to the SEC, the advisors managed customer assets at TD Ameritrade while making potentially substantial false and misleading representations to a client. This was the case even though none of the advisors in question was employed by the brokerage firm. For neglecting to report advisers’ questionable behavior in 2018, TD Ameritrade received a $500,000 punishment.

Pros & Cons

Pros Clarified

Savings with no service fees

More than 3,700 mutual funds are available via TD Ameritrade with no transaction fees. That’s excellent news for those looking to put their money into funds. Even if TD Ameritrade’s fund screening feature isn’t as helpful as it could be, it still allows you to search for funds based on a wide range of criteria. In addition, detailed information on each fund, such as its assets, and returns over different periods, may be found on its dedicated website.

Choice of Investments

Stocks, bonds, options, foreign currency, futures, and funds are all available to trade at TD Ameritrade. If you’re interested in trading cryptocurrencies, you can use futures contracts, but not in the way you can at many other brokerages.

Trade stocks and ETFs without paying a commission.

Like most online brokerages, TD Ameritrade does not charge commissions for buying and selling stocks or exchange-traded funds. However, the options contract fee charged by the broker is $0.65, comparable to that charged by Charles Schwab and Merrill Edge, two of the broker industry’s most prominent competitors.

Research and Education

With live webcasts, news, and analysis on nearly any market-related issue, TD Ameritrade provides education for novices and experts alike. You can find many investing education tools you’ll need to get the most of TD Ameritrade, from simple “how to trade stocks” instructions to in-depth options trading workshops. In addition, TD Ameritrade uses its extensive network of offices by providing educational seminars to investors at any of its 175 branch locations.

Individual stock investors will benefit from the broker’s access to research from various sources, such as Morningstar, Credit Suisse, CFRA, Thomson Reuters, and others. In addition, you can stay up-to-date on any stock by visiting its page, where you’ll find links to the latest SEC filings, earnings transcripts, and related news.

Apps for mobile devices

The broker TD Ameritrade has two trading platforms and two related mobile applications. In many ways, TD Ameritrade Mobile is a carbon copy of the more streamlined desktop version, providing valuable features in an intuitive interface.

Additionally, you can take the Thinkorswim platform with you everywhere you go with the help of the Thinkorswim Mobile app. So long as you have access to the internet, you can trade anything, including more complex instruments like futures and options with several legs. Besides Level II quotations, TD Ameritrade Network and CNBC video streams are available.

Multiple types of accounts are available.

With TD Ameritrade, you can open various accounts to suit your needs. Custodial accounts, 529 accounts, school savings accounts, trusts, and partnership accounts will join the more common individual and joint taxable accounts. Accounts for pensions and profit sharing, as well as SEP IRAs, SIMPLE IRAs, and solo 401(k)s, are also available to those planning retirement (k).

You may find almost any form of investment vehicle at TD Ameritrade.

Cons Clarified

Financing Costs

There is no inactivity cost with TD Ameritrade. However, there is a $75 transfer-out fee, while partial transfers are free. In addition, even if your broker doesn’t charge a commission for trading some mutual funds, they may still charge you a short-term trading fee of $49.99 if you sell the investment before 180 days. However, it does not impose a penalty for early ETF redemptions.

A few brokers, such as Fidelity and Interactive Brokers, have eliminated the ACATS transfer costs.

Costs associated with owning a mutual fund

Among TD Ameritrade’s selection of more than 13,000 mutual funds, more than 3,700 can be purchased and sold without charging a commission. Buying no-load funds typically entail a $49.95 charge, while the cost can go as high as $74.95 for some fund families if you don’t trade in or out of them. However, no fees are associated with selling no-load products through TD Ameritrade. The broker may not charge a fee for load money, but you should expect to pay a higher sales commission.

Fractional shares

The broker will permit you to reinvest dividends into fractional shares of stock, but you will not be able to buy stock in fractional increments. It’s terrible because fractional shares are an excellent tool for beginning investors to buy the expensive assets they desire.

Charles Schwab and Fidelity, two significant competitors, offer dividend reinvestment and fractional purchasing, respectively. The question may become irrelevant for TD Ameritrade clients once Charles Schwab completes its acquisition of the broker and incorporates its services into its own.

Is TD Ameritrade A Worth Broker to Get?

TD Ameritrade is still a good option if you’re looking for a broker because of its many helpful features. While TD Ameritrade is a top-rated broker, you should make sure that Charles Schwab is the right choice for you as well. TD Ameritrade still has a lot going for it in terms of attracting new customers:

• With a wide variety of securities, account options, and other services (many of which are free of charge), TD Ameritrade provides a full-service broker experience at a discount.
• And the broker’s many trading platforms and other top-notch trading tools mean that even seasoned investors can find something to like here.
• Investors of all experience levels can benefit from TD Ameritrade’s products, including research and educational materials.

Fidelity and Merrill Edge are other terrific options if you’re looking for a broker with extensive resources for learning and research. Additionally, E-Trade performs admirably on both counts, and thus merits consideration as a potential contender.

TD Ameritrade, like other major online brokers, provides access to a wide variety of assets, trading tools, and educational materials at competitive rates and with the highest levels of security and reliability. Although trading on different platforms is generally smooth, serious investors and traders will want to use the powerful Thinkorswim trade engine because of its many features and options. Trading and research are made more accessible for investors of all skill levels by TD Ameritrade’s variety of platform options.

TD provides a client-focused educational experience for new investors via TD Ameritrade Network, written content, video content, and formal education programs. Similarly, TD’s fully integrated platforms appeal to novice investors since they are tailor-made, goal-oriented, and easy to use. The robust features of the Thinkorswim platform make it the go-to choice for serious traders and active investors. Incorporating Charles Schwab’s fractional shares and other components into TD Ameritrade while maintaining the superb user-centered trading and education experience is a win-win for traders and investors.

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Source: Bankrate, Investopedia